Concurrence Opinion
with whom NEWMAN and LOURIE, Circuit Judges, join, concurs in the denial of the petition for rehearing en banc.
Under the Supreme Court’s decision in Christianson v. Colt Industries Operating Corp.,
Judge O’Malley’s dissent, in arguing that section 1338 does not confer jurisdiction over malpractice claims dependent on federal patent law, minimizes the substantial federal interest in federal adjudication of the patent law issues in these cases. Patent-related malpractice claims necessarily involve attorney conduct before the U.S. Patent and Trademark Office (“PTO”) or before the federal courts (because of our exclusive jurisdiction), and there is a substantial federal interest in ensuring that federal patent law questions are correctly and uniformly resolved in determining the standards for attorney conduct in these proceedings, even when the patent law issue is case-specific.
State court decisions imposing attorney discipline for conduct before the PTO and
I see no reason to revisit this court’s repeated holdings that where the outcome of malpractice cases turns on federal patent law, federal jurisdiction exists.
Notes
. See, e.g., Warrior Sports,
. In contrast, trademark-related malpractice claims such as those at issue in Singh v. Duane Morris LLP,
. See Sperry v. Fla. ex rel. Fla. Bar,
Dissenting Opinion
with whom WALLACH, Circuit Judge, joins, dissenting from the denial of the petition for rehearing en banc.
It is time we stop exercising jurisdiction over state law malpractice claims. I dissent from the court’s refusal to consider this matter en banc so that the case law through which we have expanded the scope of our jurisdiction to these purely state law matters can be reconsidered and revamped.
This court has justified expanding the reach of our jurisdiction to cover state law malpractice claims by reading Christian-son v. Colt Industries Operating Corp.,
Even if Christianson’s directives were once ambiguous, subsequent Supreme Court case law has clarified the test in a way that leaves no doubt that our narrow reading of Christianson can no longer be justified. As discussed below, proper application of Supreme Court precedent demands that we decline to exercise jurisdiction over this and similar state law malpractice actions. Rather than force the Supreme Court to correct our jurisdictional mistakes, we should take this opportunity to do so ourselves.
I.
Stephen Byrne originally brought this action in the Circuit Court of Kenton County, Kentucky, asserting a state law claim for legal malpractice based on defendants’ representation of Byrne in prosecuting a patent for a lawn care device. The gist of Byrne’s malpractice case is that defendants negligently failed to secure broader patent protection for his invention from the United States Patent and Trademark Office (“PTO”), and, as a result, Byrne was unsuccessful in a subsequent patent infringement lawsuit against Black & Decker Corporation and related entities (collectively, “Black & Decker”). See Byrne v. Black & Decker Corp.,
Defendants removed the action to the United States District Court for the Eastern District of Kentucky, asserting jurisdiction under 28 U.S.C. § 1338, on grounds that Byrne’s claim required resolution of an issue of patent law. Notice of Removal, Byrne v. Wood, Herron & Evans, LLP, No. 2:08-cv-102 (E.D.Ky. May 30, 2008), ECF No. 1. Specifically, defendants argued that, to prevail on his state law claim, Byrne would have to establish that he likely would have succeeded in a hypothetical infringement action based on the broader patent he says his counsel should have sought from the PTO. When Byrne moved to remand the action to state court, the district court denied the motion, relying on Federal Circuit case law to find that federal jurisdiction was proper under § 1338. See Byrne v. Wood, Herron & Evans, LLP,
On appeal to this court, a majority of the panel agreed that our current ease law extended § 1338 jurisdiction over this action but noted that, because it is inconsistent with Supreme Court precedent, that case law should be revisited. See Byrne v. Wood, Herron & Evans, LLP,
II.
This court has exclusive jurisdiction over appeals from district court decisions “if the jurisdiction of that court was based, in whole or in part, on § 1338.” 28 U.S.C. § 1295(a)(1) (2007). In turn, § 1338 provides in relevant part that “[t]he district courts shall have original jurisdiction of any civil action arising under any Act of
Accordingly, consistent with decisions applying § 1331, the Supreme Court has outlined a two-prong test, in which district court jurisdiction under § 1338(a) extends “only to those cases in which a well-pleaded complaint establishes either [1] that federal patent law creates the cause of action or [2] that the plaintiffs right to relief necessarily depends on resolution of a substantial question of federal patent law, in that patent law is a necessary element of one of the well-pleaded claims.” Christianson,
“[T]he vast majority of cases brought under the general federal-question jurisdiction of the federal courts are those in which federal law creates the cause of action.” Merrell Dow,
The Supreme Court focused on these federalism concerns, and incorporated them into any jurisdictional inquiry taken under the second prong of Christianson, when it decided Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing,
The facts of Grable are instructive for understanding the parameters of the test it announced. In Grable, the Court considered whether a state law claim to quiet title that depended on an interpretation of a federal tax code provision properly invoked federal question jurisdiction. Id. at 310-11,
One year later, the Supreme Court made clear that, to the extent Grable authorizes the exercise of jurisdiction in cases where federal law does not directly create the cause of action, it is to be read narrowly. See Empire Healthchoice Assurance, Inc. v. McVeigh,
III.
A.
Even before Grable added an express federalism “veto” to the federal question analysis, courts widely understood that a state law tort claim, including one for legal malpractice, did not “arise under” federal law simply because the underlying subject matter of the alleged tort was federal in nature. E.g., Diaz v. Sheppard,
Notably, before the Federal Circuit addressed this issue in 2007, the result was no different for state law malpractice claims involving an underlying patent prosecution or litigation matter. E.g., Adamasu v. Gifford, Krass, Groh, Sprinkle, Anderson & Citkowsky P.C.,
B.
In 2007, the Federal Circuit weighed in on this issue in what one commentator has described as a “substantial shift in the view of whether federal or state courts have jurisdiction over patent-related legal malpractice claims.” Robert W. Hesselbacher, Jr., Which Court Decides? Legal Malpractice Claims Arising from Patents, 51 No. 5 DRIFTD 32 (May 2009). In that year, a single panel of this court issued two decisions on the same day that, according to the panel, resolved an “issue of first impression”—i.e., whether § 1338 jurisdiction exists where a legal malpractice claim requires resolution of an underlying question of patent law. See Air Measurement Techs., Inc. v. Akin Gump Strauss Hauer & Feld, L.L.P.,
Since 2007, this court has issued three more precedential decisions applying AMT and Immunocept to other malpractice claims involving an underlying patent prosecution or litigation error. See Warrior Sports, Inc. v. Dickinson Wright, P.L.L.C.,
Federal Circuit case law on this issue has been out of step with that of other federal and state courts. In post-Gra&Ze cases involving state law tort claims that involve any federal law other than patent law, courts correctly follow a restrictive approach to federal question jurisdiction in finding that such cases belong in state court. Indeed, even where state law claims involve federal law questions over which federal courts have exclusive jurisdiction (e.g., Sherman Act, copyright), other areas of § 1338 jurisdiction (e.g., trademark, copyright), areas that are uniquely federal in nature (e.g., federal criminal law, federal tax code, aviation standards), or more garden-variety federal issues (e.g., Title VII, Age Discrimination in Employment Act (“ADEA”)), courts consistently find that such claims do not invoke federal court jurisdiction. E.g., Adventure Outdoors, Inc. v. Bloomberg,
D.
The analyses in the other circuit and district court decisions have focused on two aspects of the Grable test to find that federal jurisdiction is lacking, namely that: (1) the federal issue, even if present and
1.
As to substantiality of the federal issue, the Supreme Court, and regional circuit courts applying Supreme Court decisions, have identified certain considerations that affect whether a federal issue is “substantial”: (1) if the issue is a “pure question of law,” rather than one that is “fact-bound and situation-specific”; (2) the federal government’s interest in the issue, including whether it implicates a federal agency’s ability to vindicate its rights in a federal forum and whether resolution of the issue would be controlling in numerous other cases; and (3) if resolution of the federal issue is dispositive of the case at hand. Empire Healthchoice,
First, none of the patent-related malpractice cases over which we have found § 1338 jurisdiction involved pure questions of law; rather, they required only fact-specific applications of patent laws to the circumstances of each case. In AMT, for example, we explained that “the district court will have to adjudicate, hypothetically, the merits of the infringement claim.” AMT,
Even where courts must consider whether, absent a claim drafting or prosecution error, a valid patent would have issued, the only question is whether a different patent could have issued under the particular circumstances of that case. Those cases, therefore, do not require courts to interpret or consider the “meaning” of a patent statute, as opposed to merely applying the patent laws to the facts of a particular case. In undertaking that task, state courts and regional circuit courts, of course, can rely on and apply the body of patent law the Federal Circuit has developed. See Tafflin v. Levitt,
In short, the patent-related malpractice claims over which we have extended our jurisdictional reach require only application of patent laws to the facts of a case, and they do not implicate the “validity, construction, or effect” of the patent laws. Grable,
Second, although the federal government has an interest in the uniformity of patent law, state court adjudication of patent-related malpractice actions does not pose a serious threat to that interest. Most of the recent malpractice cases on this court’s docket turn on state law matters such as statutes of limitations, statutes of repose, or evidentiary issues. E.g., Memorylink Corp. v. Motorola, Inc., Case No. 1:09-cv-7401,
Unlike in Grable, these cases also do not present situations that require courts to determine whether an action of a federal agency complied with a federal statute. Empire Healthchoice,
Allowing state courts to resolve malpractice actions, moreover, does not restrict the ability of any federal agency to vindicate its rights in a federal forum. Unlike in Grable, which recognized the government’s strong interest in “the ability of the IRS to satisfy its claims from the property of delinquents,”
Finally, resolution of the patent issue in these malpractice actions will not be dis-positive. The patent issues in these cases relate to the causation or damages element of the plaintiffs state law claim; state law generally requires malpractice plaintiffs also to prove breach—i.e., that the defendant attorney breached a duty of care to the plaintiff or did not exercise the ordinary care of a reasonably competent attorney. Thus, in this case for example, if Byrne can prove that a broader patent could have issued, Kentucky law still requires him to prove that his attorneys, in acquiescing to the examiner’s requirement to add to a claim limitation, neglected their duty to exercise the ordinary care of a reasonably competent attorney. Stephens v. Denison,
Despite the many factors that militate against finding that a patent law issue in a malpractice case is not “substantial,” our case law has given the question of substantiality only cursory consideration. In our seminal decision on this issue, the panel in AMT found that the issue of hypothetical patent infringement was “substantial” merely because it was a necessary element of the plaintiffs malpractice claim. AMT,
By finding that whenever a federal issue is a necessary element of a plaintiffs state law claim, the federal issue automatically is a substantial one, our case law has collapsed the inquiry and discarded substantiality as a separate consideration. But that is contrary to Christianson, as clarified in Grable, which expressly requires that a federal issue be both necessary and substantial. See Grable,
2.
Our case law conflicts with Supreme Court precedent in another way as well. As noted above, Grable also requires courts to consider whether a state law claim is one “which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities.” Grable,
As the Fifth Circuit noted in Singh, the argument for extending federal jurisdiction over malpractice claims involving a federal issue “reaches so broadly that it would sweep innumerable state-law malpractice claims into federal court.”
By contrast, however, in AMT we reasoned that “we would consider it illogical for the Western District of Texas to have jurisdiction under § 1338 to hear the underlying infringement suit and for us then to determine that the same court does not have jurisdiction under § 1338 to hear the same substantial patent question in the ‘case within a case’ context of a state malpractice claim.” AMT,
Indeed, in only the little more than four years since we decided AMT and Immunocept, this court’s docket of patent-related malpractice cases, or the equivalent cases involving attorney fraud or breach of fiduciary duty, demonstrates that these are not the “rare” or “special and small category” of cases. In addition to the five decisions identified above, including AMT and Immunocept, this court heard argument in four more similar cases, including the present case, since May 2011 alone.
Because our circuit is an outlier, moreover, our case law produces the odd result that malpractice claims stemming from an underlying federal suit will only belong in federal court when the federal issue is one of patent law. That result is peculiar because states undoubtedly have a strong interest and role in regulating the conduct of all of their respective attorneys, as well as in protecting all of their residents from negligent legal services. E.g., Custer,
When we addressed Grable’s federalism concerns, the panel in AMT engaged in only a short analysis, noting simply that “[tjhere is a strong federal interest in the adjudication of patent infringement claims in federal court because patents are issued by a federal agency,” litigants will benefit
The AMT panel’s analysis of the federalism issue is also so basic that it would apply to every underlying federal issue. In any matter involving a federal issue, there will always be some federal interest in having the matter proceed in federal court, and litigants will always benefit to some degree from having the judges in those courts hear the matter. But we must be mindful of the fact that the patent issues in these cases are only incidental to the state law tort claim, and that states have at least an equally strong interest in adjudicating allegations of attorney negligence. Accordingly, simply reciting a federal interest in patent law uniformity is not enough. Three justices of the Texas Supreme Court, in dissent, recently criticized this court’s federalism analysis on these very grounds, expressing the view that, “[ujnfortunately, the Federal Circuit has not remained faithful to the Supreme Court’s federalism inquiry in the context of malpractice decisions arising from patent cases,” and that, “under the Federal Circuit’s approach, the federalism element is simply an invocation of the need for uniformity in patent law.” Minton v. Gunn,
Allowing state courts to decide patent-related malpractice claims simply does not pose a threat to the uniformity of patent law. State court decisions addressing patent law issues in the context of a state law tort claim would have no precedential effect on federal courts. See Tafflin v. Levitt,
Ultimately, even if it was unclear in 2007 that our case law would sweep an entire class of state law malpractice actions into federal court, our recent experience renders no doubt about that point. And extending jurisdiction over these cases has done little, if anything, to promote uniformity in patent law. More often, these malpractice cases require this court to resolve nuanced state law issues regarding statutes of limitations or causation. There is no principled reason why state courts cannot apply federal patent law to resolve factual issues relating to causation or damages in state law tort claims, or why such an application poses any threat to this court’s interpretation of those laws. In short, there can be little doubt that extending § 1338 jurisdiction over patent-related malpractice claims violates Grable’s federalism concerns.
IV.
Finally, although other courts have begun either to follow our case law in addressing patent-related state law claims, or have distinguished our decisions on the grounds that patent law is unusual, we should not be misled into believing that those cases endorse our analysis. Rather, they reflect the deference other courts give to the Federal Circuit on patent law issues based on our unique appellate jurisdiction.
Today, we have missed an important opportunity to correct our case law and to acknowledge that our reading of Christianson, even if once arguably justified, can no longer be so.
. The Leahy-Smith America Invents Act amended §§ 1295 and 1338, but those amendments do not apply here because they are effective only for actions commenced on or after the date of its enactment, which postdates the initiation of the present litigation. See Leahy-Smith America Invents Act, Pub.L. No. 112-29, Sec. 19, 125 Stat. 284, 331-32 (2011) ("AIA”). Even if applicable, those changes would not affect this analysis because the amendments did not alter the key "arising under” language in § 1338. Indeed, Congress expressly decided not to alter the first sentence of § 1338 when it passed the AIA, as the Federal Circuit Bar had proposed it do, precisely so as to avoid "unsettling the law in ways that no one can fully anticipate.” H.R.Rep. No. 109-407, at 6 (2006) (quoting the testimony of Professor Arthur Heilman). The AIA’s legislative history makes clear that Congress did not intend to affect the second prong of the Christianson doctrine, which relates to the jurisdictional question at issue in this case—i.e., where a state law claim involves issues of patent law. See "Holmes Group,” the Federal Circuit, and the State of Patent Appeals: Hearing Before the Subcomm. on Courts, the Internet, and Intellectual Property of the House Comm, on the Judiciary, 109th Cong., 1st Sess., 40 (Serial No. 109-7) (Mar. 17, 2005) (statement of Professor Arthur Heilman) (explaining that the second prong of the Christianson doctrine would continue to be applicable to limit federal court jurisdiction, under the version of the AIA adopted by Congress).
. Indeed, nearly a century ago in a case involving a patent issue, Justice Oliver Wendell Holmes, Jr. articulated a rule that would have excluded cases falling under the second prong of the Christianson test from federal court review, stating that "[a] suit arises under the law that creates the cause of action.” Am. Well Works Co. v. Layne & Bowler Co.,
. See also IMT, Inc. v. Haynes & Boone, L.L.P.,
. The panel majority in the present matter emphasized that cases involving only a hypothetical patent clearly do not implicate a substantial federal interest. See Byrne v. Wood, Herron & Evans, LLP,
. Although another panel on that circuit recently distinguished Singh from a case involving a fraud claim relating to a failed patent application, it did so in a conclusory analysis based almost wholly on our case law. See USPPS, Ltd. v. Avery Dennison Corp.,
. See also RX.com, Inc. v. O'Quinn,
. There are also more patent-related malpractice cases that do not reach this court either because a state court has disagreed with our analysis, thus preventing the matter from entering the federal court system, or because district courts—somewhat brazenly perhaps— have chosen not to follow our analysis in a removed action, resulting in remand orders
. Actually, in many instances, they simply reflect an effort to distinguish our cases-using our experience in patent matters as a facile way to explain away circuit case law that is inconsistent with applicable, governing standards. E.g., Adventure Outdoors,
Lead Opinion
ORDER
A petition for rehearing en banc was filed by Plaintiff-Appellant, and a response thereto was invited by the court and filed by Defendants-Appellees. The petition for rehearing was referred to the panel that heard the appeal, and thereafter the petition for rehearing en banc and the response were referred to the circuit judges who are authorized to request a poll of whether to rehear the appeal en banc. A poll was requested, taken, and failed.
Upon consideration thereof,
It Is Ordered That:
(1) The petition of Plaintiff-Appellant for panel rehearing is denied.
(2) The petition of Plaintiff-Appellant for rehearing en banc is denied.
(3) The mandate of the court will issue on March 29, 2012.
